EBMUD WARDS Board OF DIRECTORS Board Member Ward SUISUN Anticipating BAY Lesa R. McIntosh 1 John A. Coleman 2 Katy Foulkes 3 4 Change, Creating 242 Andy Katz 4 1 80 Doug Linney 5 580 RICHMOND William B. Patterson 6 Stability Frank Mellon 7 WALNUT CREEK EAST BAY MUNICIPAL UTILITY DISTRICT 3 LAFAYETTE 4 24 Alexander R. Coate, General Manager 2010-2011 BIENNIAL REPORT BERKELEY 2

680 13 EBMUD provides high-quality drinking water S A 80 N for 1.3 million customers in and F R SAN A N Contra Costa counties. FRANCISCO OAKLAND SAN C ALAMEDA RAMON I S C 580 O 6 EBMUD’s award-winning wastewater B A Y 5 7 treatment plant generates renewable energy 880 CASTRO from waste and protects ; VALLEY 580 it serves 650,000 customers.

Editor: Cheryl Farr Design: Todd Salerno Photography: John Benson, Abby Figueroa, EBMUD SERVICE AREA Todd Salerno, Rich Turner, Kingmond Young SUISUN Maps: EBMUD Graphic Design BAY SAN PABLO BAY Printing: EBMUD Reprographics

Legend Pub. 134 Dec 2011 1.5M Water Service Area

Wastewater Service Area

RICHMOND San Pablo Reservoir Briones Reservoir WALNUT CREEK LAFAYETTE Lafayette Reservoir BERKELEY EAST BAY MUNICIPAL UTILITY DISTRICT 375 11th Street, Oakland, CA 94607 S A N F 1-866-40-EBMUD R SAN A Upper FRANCISCO N San Leandro OAKLAND Reservoir SAN C ALAMEDA RAMON www.ebmud.com I S C O B A Y Chabot Reservoir

CASTRO VALLEY Focus on Reliability LEtter from the general manager The last two years have been tumultuous. While As EBMUD’s recently-appointed General Manager, I am drought released its grip on our region, record rains privileged to work with the EBMUD Board of Directors challenged us to manage against floods. Excellence and our dedicated employees to continue a tradition in financial management resulted in a AAA bond of excellence in water and wastewater operations. rating, yet budget shortfalls due to a drought and the poor economy required a hiring freeze and spending cuts. Limited resources meant making tough decisions among capital investments. Still, we made remarkable progress toward a stable future.

EBMUD is weathering the economic challenges the region faces by focusing on the basics: water and wastewater system safety and reliability, and environmental stewardship. We are meeting our targets for infrastructure key performance indicators. We have better drought water supplies and stronger dams in place. We are anticipating future needs by building better customer service software and strengthening our pool of potential employees. The years ahead will continue to test us, and we Our good fortune is a pure water source that enables welcome the challenge. Lean budget years force our customers to enjoy water quality that ranks difficult choices about what matters most, but among the best in the world. Our job is to leave a also catalyze the interest in, and need for, new legacy that reveals our commitment to reliability, approaches that will make the organization even controls costs, expresses our high regard for our 1.3 better and more efficient in the years to come. million customers and demonstrates our diligent Our region has drawn heavily on the 20th century stewardship of the natural resources entrusted to us. infrastructure that made reliable water supplies and a cleaner Bay possible. Now, it’s our turn to continue a tradition of wise investments in the water and wastewater systems for the next generation.

Alexander R. Coate General Manager

The Mokelumne Day Use Area, adjacent to the Mokelumne River Fish Hatchery, is at the base of EBMUD’s Camanche Dam in the Sierra foothills. Highlights July 1, 2009 – June 30, 2011 Overview of the Sierra Mountains. Historically, precipitation in On July 1, 2009, an improving water supply outlook this watershed varies widely. Dry years can mean ten allowed EBMUD to end mandatory rationing as times less precipitation compared to wet years. With drought loosened its grip on the East Bay. For the the recent completion of a new pumping facility on remainder of that year customers were asked to the , EBMUD customers are assured continue 10 percent voluntary rationing. Soon, more reliable dry year supplies. EBMUD has studied abundant winter rain filled reservoirs and by April the future water needs of East Bay residents and 2010, EBMUD was able to let customers know that all businesses to the year 2040. The work to meet those that was needed was ongoing wise water use. needs is in progress.

Overall, water demand was down between summer Customers First EBMUD practices 2009 and 2011. The fresh experience of serious short- Quality customer service is the result of quality staff. environmental stewardship at ages plus the economic downturn caused East Bay EBMUD cultivates employee knowledge and skill and home, building businesses to slow and families to watch their water supplements it with wise use of technology. We ask sustainable energy budgets carefully. At EBMUD, rigorous cutbacks and for customer feedback, and we use that feedback to and water-efficient prudent budgeting offset revenue shortfalls. learn and improve. Over the past two years, we built features into new customer service software so employees can new facilities like Reliable Water Supplies the Mokelumne continue serving customer needs in the future and EBMUD customers receive 90 percent of their water Watershed office in customers can access information any day at any time. the Sierra foothills. from the Mokelumne River watershed in the foothills

Environmental Stewardship each year. In 2011, EBMUD launched a collaborative Night and day, EBMUD led the effort to reduce the risk of exposure regional program to fix local sewer pipes and make EBMUD crews work to provide high to lead in drinking water by sponsoring state San Francisco Bay even healthier by reducing excess quality, dependable legislation that became a model for national law. sewage flows that reach the Bay during large storms. water service to East We achieved records in regulatory compliance and EBMUD’s efforts to keep facilities and people safe Bay communities. safe management of water and wastewater facilities from seismic hazards were boosted when an upgrade that few other entities in the world have matched. To to San Pablo Reservoir’s dam was completed. protect endangered species, EBMUD adopted one of Prudent Budgets the nation’s largest Safe Harbor Agreements. Water supplies were up, yet demand was down. Durable Infrastructure EBMUD held costs down when water system Much of the water infrastructure we rely on today revenues came in lower than budgeted by $13 was built during the East Bay’s rapid growth period million in FY10 and $23.6 million in FY11. EBMUD after World War II—a durable asset that has given funded investments in areas that would enhance us exceptional service but requires more and more public and worker safety and ensure regulatory care as it ages. Our crews complete more than 23,000 compliance, and made prudent choices as to what planned preventative work orders and respond other improvements could be delayed. promptly to make more than 56,000 corrective repairs 3 The Delta: Watershed of common concern Reliable Water Supplies While EBMUD’s water supplies are not taken directly water supply needs of the millions of Californians from the Delta, the Delta watershed is critical to who rely on the Delta must be met in a way that

EBMUD produced about 161 million our water supply reliability and fishery protection fairly apportions costs and responsibilities. EBMUD to plan, design and construct this facility. Future programs. EBMUD’s water supply aqueducts cross has stood with other Northern California water gallons of water per day during FY10-11. costs related to operations and maintenance will be fragile Delta levees to reach the East Bay. The health suppliers to ensure that all beneficiaries bear their recouped via a monthly service charge to Chevron. That’s more than two and a half billion of the Delta also is critical to the Mokelumne fishery fair share of responsibility and cost Diversified water supplies eight-ounce glasses every 24 hours. because the operation of major diversions and for the Delta. Working together as the Freeport Regional pumps can affect the migration of salmon Preparation for mid-21st Century Water Authority, EBMUD and Sacramento County and steelhead as they move to and water needs completed the Freeport Regional Water Facility. from the ocean. EBMUD invests Long-term planning helps EBMUD adjust to new Construction began in June 2007 and ended in in Delta levee maintenance to protect the regulations, population change, climate change and November 2011. The Sacramento River source will ecosystem in the Delta and to protect EBMUD’s other uncertainties. Long-term water supply plans ease the severity of future droughts in the East Bay. aqueducts. This ongoing investment is important, focus on maximizing cost-effective water conserva- The facility can deliver up to 100 MGD of water to but not enough. tion and water recycling, preserving and protecting EBMUD. Had the Freeport facility been in place in In statewide work to chart the Delta’s future, EBMUD the environment and seeking water supply and 2008, mandatory rationing that year by EBMUD has advocated for a long-term sustainable plan that storage solutions that benefit multiple regions. customers would not have been necessary. addresses both ecosystem and levee restoration. The EBMUD researched ways to extend EBMUD also completed the Bayside Groundwater water conservation and recycling into Facility, a state of the art groundwater well that can the future and determined that water inject water into a deep aquifer for storage more savings from conservation, recycling than 500 feet below ground. During droughts, water and rationing in dry years can meet from the well can be pumped from the aquifer, the increased water needs from treated at the on-site water treatment plant and projected population growth. By help- distributed to customers. The well can provide up ing customers implement changes to one MGD on average. that conserve water, an additional three million gallons per day (MGD) were saved in FY10-11.

The Freeport When industrial and irrigation customers use Regional Water recycled water during droughts more potable water Facility stands ready to provide is available for customers. Federal grant funds are water to EBMUD helping EBMUD expand recycled water service for customers in landscape irrigation in the San Ramon Valley. In FY11, dry years. the Richmond Advanced Recycled Expansion Water Project started saving 3.5 MGD of potable water daily. Chevron, EBMUD’s partner, contributed $52 million towards the capital costs EBMUD invested

4 5 Customers First Training a new workforce Forecasting that a third of the current plumber workforce will retire over the next five years, EBMUD EBMUD helps employees prepare joined with Laney College in Oakland to provide for promotional needed skills to people seeking entry into the opportunities trade. The outreach seeks out a diverse student through Pipeline body and offers training to close a skills gap that is Training Academies. a result of less vocational education being available to students. More classes are planned to support additional workforce needs.

Getting the lead out EBMUD’s leadership established the toughest The impacts of lead drinking water plumbing lead content standard in exposure on children the world. When President Obama signed legislation last a lifetime and in January 2011 adopting strict national standards are irreversible. EBMUD boldly requiring manufacturers to virtually eliminate lead launched a from water faucets and fixtures, the language was campaign to require identical to an EBMUD-sponsored bill that reduced manufacturers to California’s lead standard for drinking water plumb- remove lead from faucets and other ing from 8 percent to 0.25 percent (AB1953-Chan). water fixtures. Lead exposure can have serious impacts on children and adults, including kidney disease, hypertension, hearing loss and brain damage. Open access to business opportunities businesses for outstanding water use efficiency, When a water EBMUD wants all qualified, competitive contractors awarding each a WaterSmart Business Certificate that bill doesn’t seem right, EBMUD Responsive, personal service and entrepreneurs to be able to compete for acknowledges their efforts. EBMUD works closely with customers to meet their investigates. contract awards. EBMUD sponsors and participates Customers learn Customer service water and wastewater needs. Self-service tools allow in outreach and training events for local businesses how to read their representatives customers to conduct business around-the-clock, and to enhance their ability to compete for contracts. meter, check for are happy to talk the goal of those systems being available 99.9 percent leaks, and get and help customers A 12-session construction management training of the time was met. In FY10-11, the Contact Center tips on saving solve problems, but class for local small businesses generated positive water from field listening is what handled more than 800,000 customer contacts feedback. Fair, active and open competition representatives. they are best at. quickly and sensitively. At the same time, EBMUD enhances the likelihood of getting the best value for replaced outdated software to provide more flex- the ratepayers’ dollars. Each year, EBMUD ibility and better customer service system reliability. certifies businesses Helping customers save water that meet rigorous EBMUD tracks the water consumption of businesses water conservation and provides services to help them conserve water. standards. In 2010 and 2011, EBMUD recognized a total of 17

6 7 By restoring and optimizing habitats for fish, plants and animals, EBMUD protects water quality and watershed health. Environmental Stewardship Minimizing energy use and 28,000 acres. EBMUD built three ponds as habitat for generating renewable energy red-legged frogs. Two ponds are supplied through Energy is one of the biggest costs of delivering water overflow from nearby solar-powered systems that pro- to taps and treating wastewater. To reduce energy vide water to cattle, and the third is a spring-fed pond use, EBMUD minimizes pumping as much as possible that EBMUD staff cleared of infringing vegetation. by taking advantage of gravity. Annually EBMUD is a Protecting San Francisco Bay net energy producer. In FY10-11, EBMUD generated Medications are difficult to remove from waste- 383,000 MWh of renewable energy at its hydropower, water; dumping them down the drain sends them photovoltaic and cogeneration facilities and used through the wastewater system and ultimately out 163,208 MWh over that two-year span. More renew- to San Francisco Bay. Campaigns to encourage the able energy will be produced in the future as a result public to properly dispose of unwanted medication of a partnership with local waste haulers. The haulers collected an estimated 2,600 pounds of medication bring food scraps from grocery stores and restaurants during FY 10-11. EBMUD promotes public awareness to the wastewater treatment plant where it is digested of this and other issues through its pollution and transformed into biogas. Then, the biogas is prevention programs. turned into electricity and sent to the electrical grid.

Daily commitment to being green EBMUD’s sustainability policies and practices encourage daily attention to conserving natural resources and to reducing, recycling, reusing and reclaiming waste. New facilities like the Mokelumne Watershed Headquarters incorporate sustainable practices embodied in the Leadership in Energy and Environmental Design (LEED).

Helping fish safely cross the Delta To increase the Chinook Salmon smolt-to-adult survival rate and decrease straying, more than 6 million smolts reared at the Mokelumne Hatchery were released into the Delta at Jersey Point in spring Protected 2011. This is the second year of release into net pens watershed lands at this location. offer wonderful opportunities to Reusing what IS dUg from the streets enjoy the beauty EBMUD worked with the Presidio Trust Fund to provide of nature. 30,000 cubic yards of clean trench spoils for use as cover material at the Presidio. This reduced disposal costs for EBMUD and safely reused the trench spoils.

Protecting endangered species EBMUD and U.S. Fish and Wildlife Service entered into one of the largest Safe Harbor Agreements 8 in the country in July 2009 to protect species on 9 Durable Infrastructure

Laid end-to-end our 4,100 miles of water investments in pipes, reservoirs, dams and other pipelines would stretch from the East Bay infrastructure. With an aging system, even greater investments in these areas are anticipated in the future. to Iceland in the North Atlantic Ocean. EBMUD continually evaluates infrastructure Continual investment durability and adjusts investments to address EBMUD’s pipes, pumps and other infrastructure are the most-pressing reliability concerns. Three built to last. Still, much of the system has been in performance measures are used to evaluate service for more than 50 years. Keeping infrastruc- infrastructure reliability: ture in good repair protects the environment and public health. EBMUD is increasing investments in »» the number of unplanned water service refurbishing and replacing aging infrastructure. interruptions of various durations (fewer In FY10-11, we expanded programs to protect San than ten interruptions lasting more than Francisco Bay and made seismic improvements to four hours per 1,000 customer accounts). one of our larger dams, safeguarding thousands of »» the number of water system pipeline breaks residents downstream. (less than 20 breaks per 100 miles of pipe). New water tanks Infrastructure management like this are »» the availability of wastewater equipment replacing some During this two-year budget period, about two-thirds and facilities (at least 90 percent available). aging in-ground of every rate dollar EBMUD collected went toward reservoirs. These storage, treatment and delivery of water, day-to-day In FY10-11, EBMUD met these targets and minimized tanks help EBMUD cost-effectively keep system maintenance, planning for future improve- the impacts to customers from service interruptions water quality high. ments and repaying bonds sold to pay for long-term and pipeline breaks.

EBMUD strives for capital investment levels that will and state regulatory inspections. The science of When facilities are maintain the system in good working order through protecting dams from earthquakes is constantly upgraded, EBMUD keeps sustainability cost-effective replacement and proactive repairs. evolving. EBMUD completed new safeguards to in mind. In 2011, at In FY10-11, EBMUD replaced a total of 14.7 miles of protect San Pablo Dam from earthquakes in July the Walnut Creek water system pipe, and rehabilitation work was in 2010. This was the third seismic upgrade in the dam’s Water Treatment planning, design or construction for a wide range near-century of service. The recent work involved Plant, solar panels were installed that of projects at pumping plants, treatment plants in-place foundation improvement and buttressing raised EBMUD’s and other locations (contracts were awarded for the downstream toe. EBMUD completed this work photovoltaic rehabilitation of three steel reservoirs). while reducing disruption to the environment and generation capacity recreation and keeping the reservoir in service. to 930 MWh. EBMUD also assessed wastewater pipelines by using closed circuit TV cameras to conduct detailed As part of the seismic work, EBMUD collaborated inspections of more than 20 percent of these with the United States Geological Survey (USGS) to large diameter pipes. Capital investment goals are install a prototype instrument so USGS can measure adjusted over time based on condition assessments ground movement at the dam site and inform the of the infrastructure and to keep pace with changing general engineering community of the character- regulatory requirements. istics during earthquakes. Based on that successful effort, EBMUD is collaborating with USGS to install San Pablo Dam strengthened additional instruments at Upper San Leandro and EBMUD has a comprehensive dam safety program Pardee dams. to ensure public safety and protect water supplies. 10 11 EBMUD inspections are supplemented by federal Prudent Financial Management Effective reporting EBMUD continues to be recognized as a EBMUD’s budget document has prudent steward of ratepayer funds. received eleven consecutive national awards that recognize Stellar bond ratings effective budget presentation In 2010, EBMUD’s financial management was for preparing budget materials recognized with a AAA rating by Standard and that meet stringent guidelines as Poors, Aa1 by Moody’s Investors Service and AA+ by a policy document, operations Fitch Ratings. EBMUD’s bonds fund work to replace guide, financial plan and and improve pumping plants, storage reservoirs, communications device. EBMUD also has received pipelines and treatment plants. After a bond Prudent financial six consecutive national awards for meeting require- management helps issuance in 2010, the nation’s leading financial wire ments for financial statement presentations and ensure EBMUD service reported that EBMUD “sold taxable bonds at ratepayer dollars compliance with government accounting, auditing yields similar to the finance arm of Warren Buffett’s are used wisely and financial reporting guidelines. Berkshire Hathaway Inc.” to keep the water and wastewater systems strong. Water System FY 2011 FY 2010 During the Year: Total Water Production, millions of gallons 63,421 63,588 Average Daily Water Production, MGD* 174 174 Maximum Daily Water Production, MGD 260 253 It takes all of Bay protection in the 21st Century Minimum Daily Water Production, MGD 119 120 us to protect EBMUD has protected San Francisco Bay since of partially treated sewage into the Bay. Almost half our waterways. 1951 by providing regional wastewater treatment of each city sewage collection system is made up of Public agencies At Year End: services and, in recent decades, helping businesses private sewer laterals that connect homes and busi- are working with Number of Accounts 383,066 380,857 businesses and and residential customers keep pollutants out of nesses to the public sewer systems. In a collaborative Number of Employees 1,492 1,551 residents to fix leaky the Bay. Over the years, Bay protection agencies, settlement agreement with U.S. Environmental sewer pipes that Miles of Water Distribution Pipe 4,110 4,110 environmental groups and EBMUD have worked Protection Agency, Regional Water Quality Control can affect the Bay. Operating Distribution Storage, millions of gallons 826 812 to keep the Bay as healthy as possible. EBMUD’s Board and local environmental groups, EBMUD is wastewater treatment plant operated continuously, leading a renewed charge to keep the Bay healthy. 24 hours a day, for more than 11 years within permit During 2010 and 2011, EBMUD worked with the cities limits and without a National Pollutant Discharge in its wastewater service area (Alameda, Albany, WASTEWater System FY 2011 FY 2010 Elimination System violation—a difficult feat and a Berkeley, Emeryville, Oakland, Piedmont and the During the Year: measure of excellence. Stege Sanitary District, which includes El Cerrito, Average Daily Wastewater Flow, MGD 71 68 Kensington and parts of Richmond) to set in place Although the East Bay has separate systems for storm plans for repairing damaged pipelines as quickly At Year End: water runoff and sewage, storm water can seep as possible, and for ensuring that private property Number of Accounts 178,515 178,051 into cracked, aging sewer systems during storms, owners do the same for their leaking private sewer Number of Employees 262 253 resulting in excessive sewage flows and the runoff pipes (laterals) serving residences and businesses. 12 * MGD = millions of gallons per day 13 Water System Wastewater System WHAT WE RECEIVED Capital Contributions HOW IT WAS USED WHAT WE RECEIVED HOW IT WAS USED $45.82 [in millions] [in millions] Depreciation [in millions] [in millions] Total: $433.45 M Total: $434.05 M Total: $90.53 M Capital Contributions Total: $86.81 M $73.06 $3.09 Other Other $2.41 Depreciation $68.26 Taxes $7.38 $19.06 Investment $1.28 Water Operations & Wastewater Operations & Resource Recovery $9.40 Revenue Maintenance Revenue Interest, Net Maintenance Taxes $22.37 Interest, $283.64 $214.35 Wet Weather $50.91 $51.84 Net and and Other $15.91 Investment $5.28 Facilities Charge $16.06 Power $8.08 Other $146.64

TOTAL REVENUES COMPONENTS OF WATER REVENUE Chart Notes: [in millions] [in millions] On an expense basis, the Water System was five times the size of the Wastewater $500 $300 TOTAL REVENUES System in 2011. The pie charts on these Capital Contributions Public Authorities/Other [in millions] pages are scaled proportionally to reflect Capital Contributions Other Commercial the difference in magnitude and to facilitate $400 $100 Other Taxes $200 Industrial relative size comparisons between items in Taxes Investment Residential the pies on either side. For the bar charts, Investment $300 Power $100 $75 the monetary scale differs between Water Resource Recovery Water and Wastewater to facillitate readability. Wet Weather Facilities Charge $200 $50 $0 Wastewater 07 08 09 10 11 $100 $25

$0 WATER SYSTEM FINANCIAL HIGHLIGHTS $0 WASTEWATER SYSTEM FINANCIAL HIGHLIGHTS 07 08 09 10 11 Operating revenues have slowed during the past three years due to 07 08 09 10 11 Operating revenues and expenses have grown steadly over the past five a 2008 drought and the economic downturn which began in 2009. years with the difference between operating revenues and expenses used to fund debt service and capital improvements. Total revenues for the Water System increased 5 percent from $357 TOTAL EXPENSES TOTAL EXPENSES [in millions] million in 2010 to $377 million in 2011 primarily due to an increase [in millions] Total revenues for the Wastewater System increased 8 percent from $84 in water rates, higher water run-off for power production and a million in 2010 to $91 million in 2011, based on an increase in sewage $400 $100 Build America Bond rebate. rates, higher resource recovery revenue and a Build America Bond rebate. Depreciation Depreciation $300 Total expenses increased 8 percent from $349 million in 2010 to $75 Total expenses increased 11 percent from $78 million in 2010 to $87 Interest, Net $377 million in 2011, primarily due to an increase in bond interest Interest, Net million in 2011 primarily due to increases in treatment costs and interest and Other $200 expense from the issuance of Build America Bonds in June 2010, and Other expense from the issuance of bonds in October 2010 which is partially Operations & $50 Operations & Maintenance which was partially offset by the rebate in total revenues. offset by the rebate in total revenues. Maintenance $100 $25 Before considering capital contributions, net assets decreased Before considering capital contributions, net assets increased $1 million. $46 million. $0 $0 Cash reserves are $39 million or $20 million above the target of $19 million. 07 08 09 10 11 Cash reserves are $250 million or $138 million above the target of 07 08 09 10 11 These excess reserves will be used to fund future capital improvements. $112 million. These excess reserves will be used to fund future Standard & Poors continues to issue a AAA rating on the Wastewater capital improvements. Systems Fixed Rate Revenue Bonds. Standard & Poors continues to issue a AAA rating on the Water 14 Systems Fixed Rate Revenue Bonds. 15 Mission Statement To manage the natural resources with which the District is entrusted; to provide reliable, high quality water and wastewater services at fair and reasonable rates for the people of the East Bay; and to preserve and protect the environment for future generations.

In accomplishing this mission, we will »» Exercise responsible financial »» Provide a healthy work environment management »» Promote diversity and equality in »» Ensure fair rates and charges personnel matters and contracting

»» Provide responsive customer service »» Promote environmental responsibility and sustainability »» Promote ethical behavior in the conduct of District business

»» Ensure fair and open processes involving the public